What is a professional employer organization (PEO) and how does it help my company?

What is a professional employer organization (PEO) and how does it help my company?

15 de July, 2021

Let’s start this article defining what´s a PEO. A professional employer organization (PEO) is a type of full – service human resource outsourcing company that performs different employee administration tasks, among them we can find services such as employee benefits, payroll, worker compensation and others. Some PEOs have strategic services as well, so it’s important for you to find the provider that best suits your needs.


PEOs are really helpful for small-medium sized companies, if you work hand to hand with them your business can grow, and you can be confident knowing that human resources activities are well managed.


How can a professional employer organization (PEO) help my business?


Here are some examples of the activities that professional employer organizations do:


Employee Benefits

When it comes to employee benefits, PEO companies work with the co-employment model (a contractual allocation and sharing of certain employer responsibilities between the PEO and the client), which means there’s a large amount of members paying into benefits packages, so medium and small businesses have access to a great quality of employee benefits.


These companies can help you access medical, dental and vision coverage for your employees at accessible rates.



These services not only free up company owners so they can focus on their growth and the good development of the business, but it reduces the chance of any kind of errors on payroll management.


MidtownHR has an alliance with Paychex, and works ensuring compliance with all state and federal tax requirements, to direct deposits, electronic W-2s and more. It helps administer payments to full-time and part-time employees (salaried and hourly).


HR Compliance

HR compliance is about employment laws, regulations and advice on how to comply. If you work with an outsourcing company like a PEO that helps you with this type of activity, they can ensure that your business is in compliance with all commun labor laws.  Compliance essentially refers to the rules that your business must follow in order to protect your interests and your employees.  






Workers´ Compensation

It’s something sometimes it’s not considered, but a lot of businesses need worker compensation insurance to provide to their workers in order to give it to employees who injured themselves on the job in the course of their duties. 


In some states it is required by law, and rules vary between states, for example, in the state of florida, it is enforced to businesses with four or more employees. Construction businesses must have coverage for every employee. In the state of california every company must have it, no matter the size or the type of company.


Workers’ compensation is a critical part of protecting both your company and the people who work there. Safety management is important, PEOs use comprehensive tools in place that help reduce companies risk and the possibilities of a workplace incident.



You might be interested in: What are the best PEO company services in 2021?



What professional employee organizations do not offer?

As we have said before, PEOs can handle different types of HR administration activities, but it does not mean they have the whole control of your organization, so what they´re not going to do is:

  • Make decisions regarding your business independently
  • Marketing activities, sales or product distribution
  • Dictate pay rates, hours or schedules (but PEOs ensure compliance on 

the minimum rate pay)


Different businesses can benefit from outsourcing their HR needs to a PEO, but according to data small businesses with between five and 100 employees are especially prepared to have a great boost.


MidtownHR can help your company with simple solutions for payroll and taxes, propose benefits that really feel like benefits, keep up with employment law and also help protect your team. MidtownHR is on a mission to create a world of optimistic entrepreneurs.


MidtownHR is a PEO

We are a Professional Employer Organization (P.E.O.) that offers small and medium-sized businesses a full suite of solutions for their human resource needs.